Looking Back

Vote

But the proposal likely will be opposed by Republicans and business groups, which have traditionally said raising the minimum wage discourages companies from hiring low-skilled workers.

Mr. Obama's proposal would raise the minimum wage by 2015 in several stages. After that, there would be an annual increase in the minimum wage pegged to inflation. It comes as part of a package of initiatives White House officials are hoping will appeal to middle-class and low-income workers, many of whom have seen wages remain relatively flat—or even fall—in the past decade.

In 2008, while first running for the White House, Mr. Obama proposed raising the minimum wage to $9.50 an hour by 2011. But the White House never followed through with a push for changes in this area, and he hadn't brought the issue up again as president until Tuesday night.

In the first State of the Union of President Barack Obama's second term, Obama says it is this generations task to 'reignite' the middle class in America.

More

Administration officials believe the proposal would lead to higher wages for at least 15 million Americans by 2015, and possibly more because workers who earn just over the minimum might see a commensurate bump.

But economists and politicians are divided over the issue.

"The effects of the minimum wage are declines in employment for the very least skilled workers," said David Neumark, a University of California, Irvine, professor who has studied the issue with Federal Reserve researcher William Wascher. Mr. Neumark argues the benefits of higher minimum wages sometimes accrue to teens in higher-income families taking part-time jobs. "A lot of the benefits of minimum wages leak out to families way above the poverty line," he said.

Interactive: Full Text and Analysis of the Speech

Read WSJ reporters' comments on President Barack Obama's State of the Union address.

Mr. Neumark and Alan Krueger, a Princeton University professor who is chairman of the Council of Economic Advisers and a top aide to Mr. Obama, have written competing studies on the effects of minimum-wage increases on fast-food workers in New Jersey. Mr. Krueger found positive effects while Mr. Neumark didn't.

Fed Vice Chairwoman Janet Yellen, speaking at the AFL-CIO Monday, said she didn't think a minimum-wage increase would have a large negative effect on hiring. But she didn't endorse the idea and noted that such a move wouldn't address one of the big problems holding back the economy, which is tepid spending and investment by households and businesses.

Related Video

Former Bill Clinton Economic Adviser Laura Tyson comments on the Republican response to President Barack Obama's State of the Union speech by Marco Rubio. Photo: Getty Images.

Former President Bill Clinton's speechwriter Paul Orzulak reacts to President Obama's State of the Union address saying the speech was "as good as this art form gets."

The White House's pitch could become part of a new two-front political strategy as it attacks Republicans on economic policy at a time when policy makers are at odds on a number of issues, including taxes and spending.

The White House wants to force wealthier Americans to pay higher taxes by eliminating tax breaks, and it is now calling for wage increases for poorer Americans. Many Republicans oppose raising taxes and oppose raising the minimum wage, but they could face a test in their new public campaign to appeal to middle-class and low-income Americans.

Mr. Obama's proposal comes as the economy is showing signs of strength and weakness. The stock market is near an all-time high and employers are hiring. But economic growth remains slow and unemployment high at 7.9%.

Incomes have fallen in the past decade for many Americans. From 2000 to 2010, median income in the U.S.—the point at which half the households make more and half make less—declined 7% after adjusting for inflation, according to Census data. Poverty rates are also at historic levels, with 48.5 million Americans in 2011, or 15.9% of the U.S. population, living in poverty, according to the Census.

White House officials believe raising the minimum wage to $9 an hour would enable more families to earn more than the federal poverty level. The federal minimum wage was last increased in 2009 as part of a three-step phase-in that became law in 2007. Nineteen states have minimum wages that are above the current federal threshold, though "tipped employees," such as restaurant workers, often receive an hourly wage that is lower.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.